Why did Ministers let Flybe go bust then save the giants?

A former owner of Flybe has criticised the Government for failing to bail out the regional airline in January – just months before issuing hundreds of millions of pounds to a rival that opposed the rescue deal.

Flybe investors said the airline could have played a key role in Boris Johnson’s ‘levelling up’ strategy for the regions. They included Richard Branson’s Virgin Atlantic, Southend Airport’s owner Stobart Group, and the hedge fund Cyrus Capital.

The sentiment appeared to have been shared by then Business Minister Andrea Leadsom, who announced on Twitter that she was ‘delighted’ a rescue had been agreed to ensure ‘UK regions remain connected’.

Grounded: Warwick Brady says regional airlines and airports are vital to the Prime Minister’s plan to ‘level up’ Britain

But, speaking out for the first time since Flybe’s collapse in early March, Stobart’s chief executive Warwick Brady said the ‘politics of Branson got in the way’ of a deal, which subsequently failed to materialise.

Brady said it ‘does grate’ that Willie Walsh, chief executive of British Airways’ owner IAG, complained the proposed £100million commercial loan was ‘unfair’ a day after Leadsom’s announcement – and just a few months before IAG was granted a £300million Government loan. IAG was also granted £900million of Spanish aid for its Iberia and Vueling divisions.

Branson, who has repeatedly clashed with Walsh, has yet to agree a state loan for his beleaguered Virgin Atlantic, in which his Virgin Group has a 51 per cent stake. The rest is owned by Delta.

Brady spoke to The Mail on Sunday during an exclusive tour of Southend Airport, which is due to restart flights next month. Stobart has spent the past months installing new safety measures for the reopening. It is set to become Britain’s first airport where no passenger will have to remove liquids or laptops from their carry-on bags while going through security.

IAG filed a complaint with the EU in January over the planned rescue of Flybe, arguing it breached state aid rules, giving Flybe an unfair advantage. A string of carriers have since been bailed out.

Brady said: ‘The Government did agree to a £100million commercial loan. Then I think the politics of Branson got in the way. I think it changed the sentiment and then the politicians changed their minds.’

He added: ‘I think he’s been scuppered because people just don’t like bailing out a billionaire.’

Virgin Atlantic held a 30 per cent stake in Flybe, Stobart also held 30 per cent and Cyrus 40 per cent. The three shareholders had agreed to invest more money in Flybe if the Government bailout went ahead.

Brady called Flybe ‘a strategic asset for the country’ and the rescue deal ‘the right thing to do’.

‘Now there’s no one flying from Newquay,’ he said. ‘Southampton was decimated, Belfast is decimated. All those airports had 80 per cent of Flybe traffic.’ He said a delay in EU approval for the loan also caused problems.

‘If we had our time again we’d probably try to work out how to avoid an EU competition delay of six months and then accelerate the restructuring plan,’ he said. ‘There’s a core, good business.’ Brady also criticised the Government’s current quarantine demands on travellers coming to the UK for their holidays and on Britons when they return from trips overseas.

The Government is set to introduce so-called ‘air bridges’ tomorrow – bilateral agreements allowing travel to popular destinations such as France and Spain, without tourists having to go into quarantine.

But Stobart, which is raising up to £100million through new and existing investors, wants Ministers to let people travel freely to a wider range of countries – not just the most popular summer hotspots.

Glyn Jones, chief executive of Southend Airport, said the five most popular destinations being considered at the time accounted for just 51 per cent of Southend’s passenger traffic. He would like to see countries in central and eastern Europe, which have seen low rates of Covid-19 infections, included.

Brady added: ‘If you’re going to lock down and do the 14-day quarantine, they should have done that at the beginning. It’s like they woke up halfway through a bad dream.’

At an eerily quiet Southend Airport, vending machines selling personal protective equipment (PPE) and Perspex screens at check-in desks have been installed.

Passengers’ temperatures will be tested before security in case other countries decide this is necessary.

There is currently just one new ‘touch-free’ X-ray machine in place, but with reduced passenger numbers, no one should have to remove liquids or laptops from bags.

Some two million passengers used Southend last year, but Stobart is planning for five million, helped by a new arrivals terminal, security route and more space for shops.

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